Battle in the skies over Europe’s attempts to curb pollution from aircraft

9 thoughts on “Battle in the skies over Europe’s attempts to curb pollution from aircraft”

Hi Shaun,
Really referring to yesterday’s post on public sector spending, but our old bete-noir Adam Posen has just told the BBC that the UK should take advantage of its low debt costs to make good on infrastructure investment. (quote from The Telegraph):
“What matters with public debt, just as with private debt, is what you spend it on, so as this set of noted economists have come out and said: We always said you should do constructive public sector investment, you shouldn’t cut public investment, because the point is it’s what you spend it on and as long as interest rates are as low as they are in the UK, it doesn’t make any sense to sit on the money.”
I would have asked him precisely what money he is proposing not to sit on? The money we have yet to create? The money we have yet to borrow? It’s one thing proposing to do something constructive, indeed you have suggested such a thing, but why does he pretend the money already exists? I sometimes wonder what goes on in his head.

Hi Andy
You ask a very good question and it is a shame that such a question was not put to him. I have tracked down his recent interview with the Telegraph and note that he also says this “provided the BoE did not buy debt direct from the government, he didn’t think it mattered “that much what assets the central bank acts on”. Perhaps he will explain who will pay up if money is lost on them..

A rescue fund of finite size just gives a target to bet against. The ECB cannot act like a central bank of a soveriegn country that issues its own currency in a flexible exchange rate system.
Meanwhile, away from the trading desks, debts that cannot be paid will not be paid. Within the EMU that includes public as well a private debt. The question is whether their non-payment wil take the form of debt writedowns to the level that can be paid, or whether Europe will be subjected to a wave of foreclosures, privatisations and cutbacks in public spending. Given that the Lisbon Agreement limits deficits to 3% those economies cannot offset the affects of private sector debt deflation.
Meanwhile Germany suffers from an implanted memory about its hyperinflation: i.e. that it emanated from Reichsbank financing domestic currency spending rather than a foreign currency collapse emanating from trying to repay foereign debts far beyond the ability to pay.

Hi Sean
I agree about the rescue funds having in effect a target on them. Also the private debt that involves the banks seems to keep finding its way onto public balance sheets. For example the 100 billion Euro bailout of Spanish banks.

Hi Forbin
I find that very hard to see. So far they have allowed marginal increases in the “rescue” funds from a beginning of 500 billion Euros to 700 billion now. To actually be large enough they will need much more as in addition to the obvious new applicant Spain I expect Portugal and Greece to be along for more money soon.
So I think that somewhere along the path the cry of the boxer Roberto Duran “No Mas” or no more will be heard.
Did you mean ELP?

” the ECB will set yield targets for the government bonds of Euro area
countries which hit trouble. It will then defend these yield targets by
bond purchases to cap the yields as these levels. The obvious question
is why did nobody think of this before? The answer is that they did as
this was the implicit plan for Greece which was then applied to Ireland
and Portugal. This failed to cap the bond yields there and failed again
when applied to Spain and Italy.”

Ah yes but it will work this time – all the ECB needs to beat the sovereign bond markets is access to an infinite amount of Euros courtesy of the remaining Eurozone contributor taxpayers……..